Private Clubs in Alberta: A Thing of the Past, or a Part of the Future?

Takeaway:
Many private clubs have gone under in recent years as membership dwindles. Those that remain are having to reinvent themselves and regain lost ground.

When Charles Rothman first visited the Edmonton Petroleum Club, he thought it was a funeral home. Now, as its newly-minted CEO, he’s trying to prevent it from becoming one.

Rothman came to the Petroleum Club in May of 2012 with six years of experience working as the food and beverage director for Casino ABS. More importantly, at 35 years old, he’s not just the youngest general manager in the Edmonton Petroleum Club’s 60-year history – he’s more than two decades younger than the average club member.

According to Dan Roy, the president of the Petroleum Club’s board of governors, that age spread played a role in the decision to hire Rothman. “It’s not rocket science that when membership gets older and the numbers get thinner that you better do something about it,” Roy says. “If you’re hoping to regenerate membership, [you hire] somebody young enough to relate to new youthful members.”

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Rothman has his work cut out for him. In the last 20 years, Calgary’s 400 Club and Professional Club both closed their doors. In Edmonton, the Centre Club and Edmonton Club followed suit. Today, the Petroleum Club and the Royal Glenora are two of the only remaining private clubs in Edmonton (excluding golf courses). But even the Petroleum Club has seen a drop in membership from 805 in 2003 to 526 at the end of 2012. The slow death of private clubs picked up speed in 2008: in the midst of the global financial crisis, private clubs across Canada and the United States – particularly private equity golf courses, where members were able to sell their shares – started closing at an alarming rate.

Alberta’s clubs were no exception. Although non-equity golf courses and sports clubs remained relatively unscathed (the Calgary Winter Club just completed a $21-million renovation and has increased membership fees by nearly $10,000, while Calgary’s Glencoe Club boasts a waiting list of 290 families), private memberships are among the first luxuries to be sacrificed when families look to cut costs.

Even the venerable Ranchmen’s Club, in Calgary, is bending in order to not break. While general manager Dave Houghton says the club hasn’t made any radical changes to what it offers members (he talks with pride about the club’s active snooker and bridge leagues, for example), it has had to lower its expectations when it comes to finding new people.

“I think it’s safe to say that the days of long waiting lists are something of the past,” he says. Although vetting processes still exist for inducting new members, Houghton says they’re merely a formality. “No one is refused.”

The recession isn’t the only factor to blame for the decline in the number and influence of private member clubs in Alberta. Here, as in so many other areas, demographics have a major role to play. The average age of a private-club member is now somewhere just shy of 70, and that’s driven up membership attrition rates as people retire out of province or die without passing the legacy of belonging to their club to their children. But, perhaps surprisingly, losing members isn’t necessarily the biggest concern people like Charles Rothman have right now. The growing number of retired members – which in practice means they move from being full voting members into the retirement membership category and start paying substantially less in annual membership dues –may be an even bigger threat to the private club’s existence.

So too is the fact that they don’t have the infrastructure they need to attract new members. In contrast to family-friendly recreation clubs, private city clubs typically offer bare bones services geared to adults, like event, meeting and dining facilities. In essence, they’re little more than fraternities for grown-ups – with Manhattans and snooker in place of kegs and foosball tables – only these ones come with annual dues of up to $2,000. The situation makes for some dire warnings. “Unfortunately [private clubs are] a dying entity – not just within Edmonton or Alberta, but across Canada,” Rothman says. “If we can’t evolve at some point, we’re going to end up closing our doors.”

Over the last 12 months the Petroleum Club’s evolutionary process has begun, slowly but surely. Marketing, which was previously done in-house, will be tackled by an external firm.

New linens and china were purchased to bring back what Rothman calls a “Mad Men-era” feel. (“I really want to bring back the luster,” he says about his plans to renovate the interior). And while the club’s on-site amenities remain limited, they’ve signed a deal with World Health Clubs that will give members access to that group’s facilities. But most notably, Rothman will be reducing fees for members under 40. It’s this last change that threatens the one tradition the Petroleum Club strives to hold on to – exclusivity.

Private clubs have long relied on word of mouth for recruitment. But now the very reputation that once attracted new members is holding them back. “One of our issues is that we’ve always been deemed the old boys’ club – and for good reason,” Rothman says. While the club is actively recruiting younger members, it would also like to diversify their membership to include more minorities and women.

At 40 years old, Jennifer Fisk fits this description perfectly. The founder of Freestone Communications, a public relations firm, she’s articulate, engaged and actively involved in the community – exactly the kind of member Rothman hopes to recruit.

But for Fisk, the history of private clubs isn’t a draw – it’s a reminder of a time when her membership wouldn’t have been sought. She recalls entering the Calgary Petroleum Club for the first time in 1996. “I remember looking at their membership wall and seeing that they only allowed women to become full members in 1989. I was shocked,” she says. “It made me realize that I was in a place where people like me once never had a place. That was my first impression of private clubs, and it’s hung with me ever since.”

More importantly, Fisk doesn’t see the point in the first place. “They’re governed by a very different generation of people,” she says. “There are other places to do business. To pay to belong to one is really about buying your network.”

Mack Male, a 29-year-old software developer and Edmonton entrepreneur, agrees. “The coffee shop is my primary meeting place because it provides a more casual, creative and community-oriented setting,” he says. “It’s also a heck of lot cheaper.” Male also attends networking group events such as Emerging Business Leaders, while Fisk says she uses social media and participates in voluntary advisory boards to make business connections.

Rothman is aware of this generational mindset but says club membership is about more than business. It’s also about rubbing shoulders with the wealthy and powerful and it’s about the cool factor. He realizes clubs like his have a lot to do with regard to the latter. “Society’s changed. A lot people my age or younger don’t see it as the place to be,” he says. “We want people to be knocking on our door. I want them to want to be here and have that feeling of exclusivity.”

Food, Rothman believes, will be the Petroleum Club’s salvation. “We feel the heart of our operation lies in our kitchen.” Along with events, food and beverage sales – not membership fees or dues – remain the club’s biggest source of revenue. In addition to working with a bar consultant to create a refreshed classic cocktail menu, Rothman hired Doreen Prei, a chef who has worked in Italy, Germany and England (including London’s Michelin-starred First Floor), and at the Hotel Macdonald and Zinc in Edmonton. With Prei’s focus on farm-to-fork, modern food, Rothman believes the Petroleum Club will not just be able to compete with the restaurant industry in Edmonton. In due time, it will become the place to be, he says.

Still, he admits that he’s had a few sleepless nights. “If it doesn’t work and at some point the club closes its doors, I’m going down with the ship,” he says. “We’re looking at putting what we have left financially back into this club. We’re taking a risk. But we’re taking a calculated one [risk] and one we feel is the only possible thing that we can do to save the future of this club.” The club’s renaissance, it seems, is only just beginning.

Sub-Par

When it comes to golf, the grass isn’t always greener at private courses. “Golf in North America has been struggling,” says Greg Lundmark, CEO of Calgary’s Glencoe Golf and Country Club. While Canadian courses weren’t as drastically affected by the recession as their American peers – private courses in the U.S. built with adjoining housing developments were hit the hardest – the loss of members has still been felt. According to a 2012 Golf Consumer Survey, 6.5 per cent of golfers leave private or semi-private courses annually.

There are a number of reasons for this shift. Unlike city clubs, golf clubs are often set up on an equity shareholder model, which means that rather than purchasing memberships, golfers buy shares and pay annual dues. “You have the ability to sell your share and take a portion of the money,” Lundmark says. While the number of golfers in Canada hasn’t necessarily decreased, the number of rounds of golf played per year has, making annual dues of $2,000 and upwards a hefty price to pay for the occasional game.

As membership turnover has increased, golf courses such at the Royal Mayfair and the Edmonton Country Club have begun to offer discounted membership fees to golfers under 40. They aren’t alone. Across Canada, once-strict rules – such as dress codes and bans on personal electronics – are being relaxed to attract younger players. And rather than insisting members pay their full share up front, payment plans are available.

Regardless, golf remains one of the top recreational activities in Canada, ranking higher than hockey. Canadian golf participation rates are among the highest in the world, with players spending an estimated $13.1 billion annually. For courses such as the Glencoe, this means the notion of teeing off on the number one ranked practice facility in North America still has cachet.

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